Reference no: EM132556440

Susan Company produces a product called 'N96' which required to go through two processes, Process 1 and Process 2. The following information relates to Process 2 for the month of March 2020:

                                                                                Units                Percent                       Completed

                                                                                                               Materials                   Conversion

Work-in-process, 1 March                                    21,000              80%                        60%

Transferred from Process 1 and started in Pro 2        84,000

Completed and transferred out                             73,500

Work-in-process, 31 March                                 31,500                    30%                       40%

Costs for March                                            Transferred-in from Process 1 ($)         Materials ($)             Conversion ($)

Work-in-process, 1 March                                                120,000                               19,000                          17,000

Added during the month                                                    462,000                              264,600                       183,750

It is the company's policy to adopt FIFO method in its process costing system.

Required:

Question (a) Determine the equivalent units for transferred-in from Process 1, materials and conversion for March.

Question (b) Determine the cost per equivalent unit for transferred-in from Process 1, materials and conversion for March.

Question (c) Determine the total cost of ending work-in-process inventory and the total cost of units transferred to finished goods in March.

Question (d) Briefly explain how the adoption of a lean manufacturing approach affects process costing.

Question (e) 'Normal loss is included in the cost of good output units, while abnormal loss is recorded as a period cost.' Comment on this statement.